Analyst double-take: Credit Suisse slashes its McDonald's target a day after reiterating forecast

  • Credit Suisse is less bullish on its recommendation for McDonald's shares after talking to some franchisees.
  • The firm says the franchisees admitted sales at their restaurants "have slowed so far this year."
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Credit Suisse is less bullish on its recommendation for McDonald's shares after talking to some franchisees.

"We have spoken with three McDonald's franchisees across the US to gauge trends so far in 1Q18. While these checks are anecdotal, they have been directionally helpful in the past. McDonald's franchisees consistently reported that sales have slowed so far this year," analyst Jason West wrote in a note to clients Tuesday. "While this 1Q update is disappointing, we remain optimistic that sales can improve in coming qtrs."

The restaurant chain's stock is down 12 percent this year through Monday due to investor concerns over its first-quarter U.S. sales. The company launched its $1, $2 and $3 menu in January.

West reiterated his outperform rating, but lowered his price target to $175 from $191 for McDonald's shares. The new target is 16 percent higher than Monday's closing price.

The call comes a day after the analyst reaffirmed his price target on Monday, citing the restaurant chain's valuation.

The analyst reduced his first-quarter U.S. same-store sales growth forecast for McDonald's to 1.5 percent from 3.5 percent. He reaffirmed his 3 percent growth estimate for the rest of the year.

West predicts the new value menu will improve sales in the future, as will the national launch of fresh beef burgers in May.

McDonald's shares declined slightly Tuesday after the report.